interactive investor comments on the FCA cost of living survey

Commenting, Myron Jobson, Senior Personal Finance Analyst, interactive investor, says: “On paper, the landscape for personal finances has improved significantly, but in reality, many households are still experiencing a financial squeeze on several fronts.

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“While inflation is now at the lowest level in two years, we’re aren’t out of the financial woods yet. After 14 rate hikes, interest rates are now at their highest level since 2008, which means that Britons are paying more for mortgages, credit card debt and other loans than they might have paid in the past.

“The strong wage growth run, peaking in 2023 when wages grew by a 40-year high of 6.1%, has gone some way towards easing the cost-of-living squeeze on budgets. We are finally in a place where wage growth is finally outstripping inflation, but there is still some time to recover.

“Also, not every worker has been fortunate enough to receive a pay rise. They’ve effectively taken a pay cut as their income has not kept pace with inflation. Even for those who have received a pay rise, a higher salary could only serve to cover the household costs that have risen with inflation and beyond or catch up on outstanding bills and loans.

“Thankfully, prices aren’t climbing as quickly as they once were, but the headline inflation figure remains almost double the Bank of England target level. The stark reality is financial progress for many feels stagnant, but there is a lot to feel optimistic about in regard to personal finances. As ever, it remains important to keep a keen eye on your finances and make adjustments if needed to maintain financial resilience.”